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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 28, 1998
MEDIRISK, INC.
(Exact name of registrant
as specified in its charter)
Delaware 000-27056 58-2256400
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
Two Piedmont Center, Suite 400, 3565 Piedmont Rd., Atlanta, Georgia 30305
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(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code: (404) 364-6700
N/A
---------------------------------------------------------------
(Former name or former address, if changed since last report)
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EXPLANATORY NOTE
This amendment on Form 8-K/A is being filed solely for the purpose of
amending Item 7(b) of the Registrant's Report on Form 8-K/A previously filed on
June 5, 1998 (the "Successful Solutions 8-K/A"). The Company has adjusted the
pro forma financial information set forth in Item 7(b) of the Successful
Solutions 8-K/A to reflect the results of applying new guidance from the Staff
of the Securities and Exchange Commission (the "Staff") regarding in-process
research and development. The new guidance was received after the Company
originally filed the Successful Solutions 8-K/A. Although the Company believes
that its original accounting treatment was in accordance with generally accepted
accounting principles, it has accepted the Staff's new guidance with respect to
these matters and has made certain adjustments as set forth in this amended
filing. Item 7(b) of the Successful Solutions 8-K/A is superseded by this
amendment. Items 7(a) and 7(c) of the Successful Solutions 8-K/A remain
unchanged by this amendment.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION.
UNAUDITED PRO FORMA FINANCIAL DATA
The unaudited pro forma consolidated condensed balance sheet as of March
31, 1998 set forth below gives effect to the Company's acquisition of Successful
Solutions as if it had occurred on March 31, 1998. The unaudited pro forma
consolidated condensed statement of operations for the three months ended March
31, 1998 set forth below give effect to the Company's acquisitions of Successful
Solutions on May 28, 1998 and Healthdemographics on March 31, 1998 as if they
had occurred on January 1, 1998. The unaudited pro forma consolidated condensed
statement of operations set forth below for the year ended December 31, 1997
gives effect to the Company's acquisition of (i) Successful Solutions on May 28,
1998, (ii) Healthdemographics on March 31, 1998, (iii) CareData Reports, Inc.
("CareData") on August 28, 1997, and (iv) CIVS, Inc. ("CIVS") on June 24, 1997,
as if they had occurred on January 1, 1997. The Successful Solutions,
Healthdemographics, CIVS and CareData acquisitions have each been accounted for
using the purchase method of accounting. The pro forma financial data should be
read in conjunction with the historical consolidated financial statements and
notes of the Company, included in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission (the "Commission") on March 30,
1998, and the historical financial statements and notes of: (i) Successful
Solutions, included in this report on Form 8-K/A; (ii) Healthdemographics,
included in the Company's Current Report on Form 8-K, filed with the Commission
on April 13, 1998; (iii) CIVS included in the Company's Current Report on Form
8-K/A, filed with the Commission on September 5, 1997; and (iv) CareData
included in the Company's Current Report on Form 8-K/A, filed with the
Commission on November 14, 1997. The pro forma combined results are not
necessarily indicative of the results that would have been achieved had the
acquisitions of Successful Solutions, Healthdemographics, CIVS and CareData
occurred on January 1, 1997 or of future operations.
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SUCCESSFUL SOLUTIONS, INC.
MEDIRISK, INC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
March 31, 1998
(Amounts in thousands)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
MEDIRISK SUCCESSFUL SOLUTIONS ADJUSTMENTS CONSOLIDATED
-------- -------------------- ----------- ------------
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents $ 1,280 $ 274 $ -- $ 1,554
Accounts receivable, net 4,749 146 -- 4,895
Prepaid expenses 977 13 -- 990
Other current assets 499 1 -- 500
-------- ------- ------- --------
Total current assets 7,505 434 -- 7,939
Property and equipment 3,604 380 -- 3,984
Less accumulated depreciation and amortization 1,642 209 -- 1,851
-------- ------- ------- --------
Property and equipment, net 1,962 171 -- 2,133
Excess of cost over net assets of businesses
acquired, less accumulated amortization 12,351 -- 2,350 (1) 14,701
Intangible assets, less accumulated amortization 1,915 -- 500 (2) 2,415
Software development costs, less accumulated
amortization 1,395 -- -- 1,395
Other assets 663 -- -- 663
-------- ------- ------- --------
Total other assets 16,324 -- 2,850 19,174
Total assets $ 25,791 $ 605 $ 2,850 $ 29,246
======== ======= ======= ========
Current liabilities
Current installments of long-term debt and obligations under
capital leases $ 2,499 $ 22 $ 2,920 (4) $ 5,441
Accounts payable 398 -- -- 398
Accrued expenses 1,370 43 150 (3) 1,563
Income taxes payable 730 -- -- 730
Accrued contingent consideration relating to acquired
business 2,975 -- -- 2,975
Deferred revenue 2,615 -- -- 2,615
-------- ------- ------- --------
Total current liabilities 10,587 65 3,070 13,722
Long-term debt and obligations under capital leases, excluding
current installments 41 16 -- 57
Deferred tax liability -- -- 200 (22) 200
-------- ------- ------- --------
Total liabilities 10,628 81 3,270 13,979
Shareholders' equity (deficit):
Common stock 5 -- -- (5) 5
Additional paid in capital 31,663 -- 3,504 (5) 35,167
Accumulated deficit (16,505) 524 (524)(6) (19,905)
(3,400)(7)
-------- ------- ------- --------
Total stockholders' equity 15,163 524 (420) 15,267
Total liabilities and shareholders' equity (deficit) $ 25,791 $ 605 $ 2,850 $ 28,246
======== ======= ======= ========
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed financial
statements.
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MEDIRISK, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
---------------------------------------------------------------------------
HISTORICAL
----------------------------------------
SUCCESSFUL HEALTHDEMO- PRO FORMA PRO FORMA
MEDIRISK SOLUTIONS(8) GRAPHICS(9) ADJUSTMENTS CONSOLIDATED
-------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenue................................... $ 5,176 $ 771 $ 342 -- $6,289
Salaries, wages and benefits.............. 2,574 200 613 -- 3,387
Other operating expenses.................. 1,522 517 437 -- 2,476
Depreciation and amortization............. 427 14 11 108 (10) 560
Acquired in-process research and
development costs and integration
costs................................... 4,815 -- -- (4,750)(11) 65
------- -------- ----- ------ ------
Operating income (loss)......... (4,162) 40 (719) 4,642 (199)
Interest income (expense), net............ 36 (1) (138) (106)(12) (209)
Other income (expense).................... -- -- -- -- --
Provision for income taxes................ -- -- -- -- --
------- -------- ----- ------ ------
Income (loss) before
extraordinary item............ (4,126) 39 (857) 4,536 (408)
Unaudited pro forma loss per common share
before extraordinary item -- basic and
diluted................................. $ (0.92) $(0.08)
======= ======
Unaudited pro forma weighted average
number of common shares used in
calculating unaudited net loss per
common share before extraordinary
item -- basic and diluted............... 4,495 4,854 (13)
</TABLE>
See accompanying notes to unaudited pro forma financial data.
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MEDIRISK, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
----------------------------------------------------------------------------------------------
HISTORICAL
------------------------------------------------------------------
SUCCESSFUL HEALTHDEMO- 1997 PRO FORMA PRO FORMA
MEDIRISK SOLUTIONS(14) GRAPHICS(15) ACQUISITIONS(16) ADJUSTMENTS CONSOLIDATED
-------- ------------- ------------ ----------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenue........................... $16,749 $ 3,439 $ 905 $1,730 $ -- $22,823
Salaries, wages and benefits...... 7,910 860 971 1,296 -- 11,037
Other operating expenses.......... 4,374 1,792 752 1,099 -- 8,017
Depreciation and amortization..... 1,304 56 18 47 838 (17) 2,263
Acquired in-process research and
development costs and
integration costs............... 4,575 -- -- -- (4,258)(18) 317
------- ------- ----- ------ ------- -------
Operating income
(loss)................ (1,414) 731 (836) (712) 3,420 1,189
Interest income (expense), net.... 345 (12) (26) 8 (757)(19) (442)
Loss on disposal of asset......... -- (2) -- -- -- (2)
Provision for income taxes........ (707) -- -- -- 707 (20) --
------- ------- ----- ------ ------- -------
Income (loss) before
extraordinary item.... $(1,776) 717 $(862) $ (704) $ 3,370 $ 745
======= =======
Unaudited pro forma income (loss)
per common share before
extraordinary item -- basic and
diluted......................... $ (0.45) $ 0.17
======= =======
Unaudited pro forma weighted
average number of common shares
used in calculating unaudited
income (loss) per common share
before extraordinary
item -- basic and diluted....... 3,918 4,404 (21)
</TABLE>
See accompanying notes to unaudited pro forma financial data.
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MEDIRISK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA
Effective May 28, 1998, the Company acquired all of the outstanding shares
of Successful Solutions of Vidalia, Georgia, which provides decision support
tools, consulting services and training materials to hospitals and physician
groups to assist them in improving patient outcomes, achieving the efficient
delivery of care and establishing billing and coding practices that comply with
industry requirements. The Company purchased Successful Solutions for
approximately $2.9 million in cash and 189,811 shares of common stock. The
acquisition was accounted for using the purchase method of accounting with the
results of operations of the business acquired included from the effective date
of the acquisition. The acquisition resulted in in-process research and
development costs estimated to be approximately $3.4 million, acquired products
of approximately $500,000, and excess of cost over assets acquired estimated to
be approximately $2.4 million.
Effective March 23, 1998, the Company acquired all of the outstanding
shares of Healthdemographics of San Diego, California, which provides databases
and decision-support tools that allow customers to forecast the supply of and
demand for health care services. The Company purchased Healthdemographics for
approximately $2.7 million in cash and 171,315 shares of common stock. The
acquisition was accounted for using the purchase method of accounting with the
results of operations of the business acquired included from the effective date
of the acquisition. The acquisition resulted in in-process research and
development costs estimated to be approximately $4.8 million, acquired products
estimated to be approximately $120,000, and excess of cost over net assets
acquired estimated to be approximately $1.8 million.
Effective June 1, 1997, the Company acquired all of the outstanding shares
of CIVS of Rockville, Maryland, a leading national provider of credentialing
services to hospitals and managed care organizations for approximately $3.5
million in cash and 129,166 shares of the Company's common stock and the
assumption of net assets of $76,000. The acquisition was accounted for using the
purchase method of accounting with the results of operations of the business
acquired included from the effective date of the acquisition. The acquisition
resulted in purchased in-process research and development costs of approximately
$3.1 million, acquired products of approximately $415,000, and excess of cost
over net assets acquired of approximately $1.1 million.
Effective August 1, 1997, the Company acquired all of the outstanding
shares of CareData of New York, New York, which creates reports analyzing
consumer satisfaction with more than 150 aspects of managed health care plans
and ranks specific health plans accordingly. The Company purchased CareData for
approximately $4.1 million in cash and 14,516 shares of Medirisk common stock.
The acquisition was accounted for using the purchase method of accounting with
the results of operations of the business acquired included from the effective
date of the acquisition. The acquisition resulted in in-process research and
development costs of approximately $975,000, acquired products of approximately
$200,000, and excess of cost over net assets acquired of approximately $2.9
million. Approximately $3.0 million of contingent consideration resulting from
the CareData acquisition was paid at the end of April 1998. This payment was
treated as an increase in excess of cost over net assets acquired.
The unaudited pro forma consolidated statement of operations as of
March 31, 1998 illustrates the estimated effects of the Successful Solutions and
Healthdemographics acquisitions as if the acquisitions had occurred on January
1, 1998. The unaudited pro forma consolidated condensed statement of operations
for the year ended December 31, 1997 illustrates the estimated effects of all
these acquisitions had they occurred on January 1, 1997.
The unaudited pro forma financial data have been prepared using the
purchase method of accounting, whereby the total cost of the acquisition is
allocated to the tangible and intangible assets acquired and liabilities assumed
based upon their respective fair values at the effective date of such
acquisition. For purposes of the unaudited pro forma financial data, such
allocations have been made based upon currently available information and
management's estimates.
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The historical financial statements are derived from the unaudited
financial statements of the Company, Successful Solutions, and
Healthdemographics as of and for the three months ended March 31, 1998, the
audited financial statements of the Company, Successful Solutions, and
Healthdemographics as of and for the year ended December 31, 1997, and the
unaudited financial statements of CIVS and CareData for the periods beginning
January 1, 1997 and ending on the effective dates of the respective
acquisitions.
The unaudited pro forma financial data do not purport to represent what the
results of operations of the Company would actually have been if the
acquisitions had occurred on such dates or to project the results of operations
of the Company for any future date or period. The unaudited pro forma financial
data should be read together with the Financial Statements and Notes thereto of
the Company, Successful Solutions, Healthdemographics, CIVS and CareData
referred to above. The unaudited pro forma financial data reflect the following
adjustments:
(1) Reflects $2.4 million of goodwill recorded as a result of the
allocation of the Successful Solutions purchase price.
(2) Reflects the technological know-how recorded as a result of the
allocation of the Successful Solutions purchase price.
(3) Reflects the accrual of direct acquisition costs recorded as a
result of the allocation of the Successful Solutions purchase price.
(4) Reflects the cash payment and borrowings against the Company's
line of credit to fund the cash portion of the Successful Solutions
acquisition.
(5) Reflects the value of the Company common stock issued in
connection with the acquisition of Successful Solutions.
(6) Reflects the elimination of the historical equity accounts of
Successful Solutions.
(7) Reflects the non-recurring write-off of acquired in-process
research and development costs recorded as a result of the allocation of
the Successful Solutions purchase price.
(8) Reflects the historical operating results of Successful Solutions
for the period from January 1, 1998 to March 31, 1998.
(9) Reflects the historical operating results of Healthdemographics
for the period from January 1, 1998 to March 22, 1998.
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<PAGE> 8
(10) Reflects the additional amortization of intangible assets
recorded as a result of the allocation of the Successful Solutions and
Healthdemographics purchase prices.
<TABLE>
<CAPTION>
Period ended
March 31, 1998
--------------
(Amounts in
thousands)
<S> <C>
Successful Solutions.................... $ 67
Healthdemographics...................... 41
----
$108
====
</TABLE>
(11) Removes the impact of the non-recurring acquired in-process
research and development costs recorded as a result of the allocation of
the Healthdemographics purchase price. This charge was included in the
March 31, 1998 historical statements of operations and is being excluded
from the quarter ended March 31, 1998 unaudited pro forma consolidated
condensed statements of operations.
(12) Reflects the additional interest expense on the cash used to fund
the acquisitions of Successful Solutions and Healthdemographics.
<TABLE>
<CAPTION>
Period ended
March 31, 1998
--------------
(Amounts in
thousands)
<S> <C>
Successful Solutions.................... $ 58
Healthdemographics...................... 48
----
$106
====
</TABLE>
(13) Reflects the increased shares of common stock outstanding
resulting from the acquisitions of Successful Solutions and
Healthdemographics.
<TABLE>
<CAPTION>
Period ended
March 31, 1998
--------------
(Amounts in
thousands)
<S> <C>
Successful Solutions.................... 190
Healthdemographics...................... 169
---
359
===
</TABLE>
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(14) Reflects the historical operating results of Successful Solutions
for the year ended December 31, 1997. An estimated $3.4 million charge for
in-process research and development costs was recorded by the Company on
May 28, 1998. This charge is being excluded from the year ended December
31, 1997 unaudited pro forma consolidated condensed statement of
operations.
(15) Reflects the historical operating results of Healthdemographics
for the year ended December 31, 1997. An estimated $4.8 million charge for
in-process research and development costs was recorded by the Company on
March 23, 1998. This charge is being excluded from the year ended December
31, 1997 unaudited pro forma consolidated condensed statement of
operations.
(16) Reflects the historical operating results of CIVS for the five
months ended May 31, 1997 and CareData for seven months ended July 31,
1997. The operating results of these entities subsequent to their
acquisition effective dates through December 31, 1997 are included in the
Company's operating results.
(17) Reflects the additional amortization of intangible assets
recorded as a result of the allocation of the respective purchase prices.
These amounts were as follows:
<TABLE>
<CAPTION>
1997
------------
(AMOUNTS IN
THOUSANDS)
<S> <C>
Successful Solutions.................... $268
Healthdemographics...................... 171
CIVS.................................... 64
CareData................................ 335
----
Total $838
====
</TABLE>
(18) Reflects the reversal of the non-recurring acquired in-process
research and development costs and integration costs associated with the
acquisitions of CIVS and CareData. These charges were included in the
Company's December 31, 1997 historical statements of operations and are
being excluded from the year ended December 31, 1997 unaudited pro forma
consolidated condensed statement of operations. These amounts were as
follows:
<TABLE>
<CAPTION>
1997
-------------
(AMOUNTS
IN THOUSANDS)
<S> <C>
CIVS.................................... $3,280
CareData................................ 978
------
Total $4,258
======
</TABLE>
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(19) Reflects the additional interest expense on the cash borrowings
used to fund the acquisitions. These amounts were as follows:
<TABLE>
<CAPTION>
1997
-------------
(AMOUNTS IN
THOUSANDS)
<S> <C>
Successful Solutions.................... $234
Healthdemographics...................... 216
CIVS.................................... 115
CareData................................ 192
----
Total........................... $757
====
</TABLE>
(20) Reflects decrease in income tax expense due to pro forma losses
incurred.
(21) Reflects the increased shares of common stock outstanding
resulting from the acquisitions. These shares were as follows:
<TABLE>
<CAPTION>
1997
--------------
(IN THOUSANDS)
<S> <C>
Successful Solutions.................... 190
Healthdemographics...................... 171
CIVS.................................... 115
CareData................................ 10
---
Total........................... 486
===
</TABLE>
(22) Reflects the difference between the financial statement carrying
amount and the tax bases of acquired products in connection with the
Successful Solutions acquisition.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDIRISK, INC.
By: /s/ Thomas C. Kuhn III
----------------------------------------
Thomas C. Kuhn III
Senior Vice President
Chief Financial Officer
Dated: January 28, 1999
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